Fiat Says No Chrysler IPO In 2013
To fuel your love of cars,
visit the Autos section.
Get Breaking News First
FLORENCE, Italy (AP) – Chrysler won’t be offering its stock for sale on the public markets this year.
Italian automaker Fiat SpA, Chrysler’s majority owner, said in a statement Monday that Chrysler’s board has determined an initial public offering is “not practicable” in 2013.
Instead, Chrysler Group LLC will continue work on the offering so it can happen in the first quarter of next year, the statement said.
Fiat owns 58.5 percent of Chrysler’s shares, with the remaining 41.5 percent held by a United Auto Workers union trust fund that pays health care bills for blue-collar retirees.
But Sergio Marchionne, CEO of both automakers, has been squabbling with the trust over the price, and so far they haven’t been able to reach agreement. Marchionne wants to buy the trust’s shares in order to combine the companies.
The IPO would consist of shares currently held by the trust. Last month, UBS AG set the value of the trust’s stake at $5.6 billion. Fiat has gone to court seeking a judgment on the price, but the trial date is set for next September.
The pricing process for the IPO might be the stimulus needed for the two sides to reach agreement and avoid the public sale. “I’m not selling anything and nor do I think we need to do so,” Marchionne said in October.
Marchionne can’t spend Chrysler’s cash on Fiat’s operations unless the companies merge. He has made it clear that he would prefer to settle the dispute without an IPO, but filed the paperwork for the offering in September at the trust’s request.
But Chrysler’s profits have been propping up Fiat on the balance sheet all year as the Italian automaker struggles in a down European market.
The Auburn Hills, Mich., automaker earned $464 million last quarter on U.S. sales of the Ram pickup and Jeep Grand Cherokee, its ninth-straight profitable quarter. The results boosted Fiat, which earned $260 million in the third quarter. Without Chrysler’s contribution, Fiat would have lost $340 million.
(© Copyright 2013 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)